U.S. Stocks Recoup Steep Morning Losses

Dow: +0.05% | Nasdaq: -0.50% | S&P: +0.13%

Catch Up Quick

• According to authorities, Golf superstar Tiger Woods was injured this morning in Los Angeles when his SUV crashed and rolled over

• Tesla shares were down as much as 13% this morning as year-to-date returns drop below zero

• Videogame company Roblox plans to directly list shares on March 10th

• The Supreme Court grants approval to Manhattan prosecutors to subpoena Trump's taxation information

• WeWork Co-Founder / Ex-CEO Adam Neumann is in talks with SoftBank on a ~$500M pay cut to facilitate WeWork's 2nd IPO attempt

• Lucid Motors, an electric car maker led by ex-Tesla Chief Engineer Peter Rawlinson, agreed to IPO at a ~$24B valuation via a reverse merger with Churchill Capital Corp IV ($CCIV) → largest SPAC merger ever

• The House is on track to pass President Biden's $1.9T relief package → expected to include a total of $422B in stimulus checks

• Google is set to lift its political ad ban initiated after the Capitol siege

• BofA Chief Economist Michelle Meyer was the latest to raise GDP targets → increasing to 6% for 2021 & 4.5% for 2022

• Crypto exchange Coinbase was valued at > $100B in a recent private deal → could IPO at a valuation higher than any U.S. tech company since Facebook

• Dyal Capital Partners is set to complete its merger with direct lender Blue Owl before going public via SPAC at a $12.5B valuation

• The FAA will require "stepped up" inspections of Boeing 777 aircrafts

• Goodyear ($GT) agreed to buy Cooper Tire & Rubber ($CTB) for around $2.8B in cash and stock

Thought of the Day

• Recently, lumber prices topped $1K (up 100% since November 2020) before crashing ~10% today

• Consequently, single-family housing starts dropped 12% last week as ballooning lumber costs are believed to have increased home prices by an average of $16K

  Housing starts refers to the number of new residential construction projects that begin during a particular period

• As equity market indices continue to falter, home builders such as Lennar Corp ($LEN) and KB Homes ($KBH) have been hit especially hard, dropping 8-10% in conjunction with online marketplaces such as Zillow ($Z) down ~18% since

• However, while many have touted the drop in starts as a signal of reversal in the housing market, these concerns could possibly be overblown

• While housing starts may have dropped, construction permits, which precede starts as an economic indicator, climbed to their highest level in >12 years

• Historical data suggests that a majority of housing starts happen within 1 -2 months of an issued permit, while ~1% never happen

• This indicates that if home builders have been applying for a record number of permits, they are still very bullish on future demand which is meaningful given their expertise and experience

  

The Bottom Lines

• Both the urban exodus triggered by the pandemic and the Fed signaling they plan to keep rates low place well as catalysts for future housing market demand, especially as vaccines reopen the broader economy

• Subsequently, as the vaccine distribution accelerates societal equilibrium, it’s possible we will see a return to normalcy in the raw materials bottleneck that has led to a rapid appreciation in the cost of building materials  

• Specifically, in regards to lumber, Trump had levied tariffs up to 24% on Canadian softwood (our largest supplier of lumber), in which Biden may look to reduce or repeal given his debatably perpendicular stance on free trade, and recent momentum around rolling back Trump-era legislation!

  Afternoon Audit Home